Palmer, R (on the application of) v Secretary of State for the Home Department

MR JUSTICE COLLINS: On 18th May 2001 the claimant, Mr John Palmer, was convicted on two counts of conspiracy to defraud and on 23rd May was sentenced to a total of eight years' imprisonment. The fraud related to timeshares in Tenerife and there were a considerable number of victims, most of whom lost not insubstantial, but not enormously substantial, sums of money.

A confiscation order was made by the learned judge in the very large amount of £33,243,812.46, which no doubt reflected the extent of the fraud. There was a sentence of 11 years' imprisonment consecutive imposed if that amount was not paid. In addition, the learned judge ordered that Mr Palmer should pay compensation to a number of named victims of the fraud in the sum of £2,039,899.14 and should also pay a sum of just under £350,000 in relation to prosecution costs.

The claimant appealed to the Court of Appeal against the confiscation order and against the costs. The Court of Appeal, on 31st July 2002, quashed the confiscation order and reduced the costs order to just over a quarter of a million pounds. It upheld the compensation order in the sum that I have already indicated.

However, it transpired that there was material to give the claimant cause to believe that there had been some errors made in the amount of compensation and so an appeal was pursued in relation to that. That was finally disposed of at the end of January 2004, when the Court of Appeal upheld the amount of compensation.

So far as that is concerned, the claimant had, as a condition of his bail, been ordered to lodge some £1.7 million with the Magistrates' Court. He was, whilst on bail, allowed to travel abroad and in particular to Tenerife and that was the amount that the court felt ought to be deposited as a security against his absconding.

In addition, as will become apparent, in December 2003 the balance of the compensation order, some £960,000, was paid into an escrow account to await the final outcome of the appeal and once the appeal was dismissed, I assume, although I do not actually have any direct evidence, that the compensation was paid. Certainly that is what I have understood.

The claimant, when he was first received into prison, was given a provisional category A. This was reduced, in February 2002, to category B. That again was reduced a year later, in February 2003, to category C and he was serving his sentence in the autumn of last year at Coldingley Prison. It was then decided -- and it is again not entirely clear what triggered this decision because normally reviews of long-term prisoners are held annually -- that he could be downgraded to category D and would be allocated to an open prison. The prison which was on offer, if I may put it that way, was Springhill Prison. That decision was made on 11th November 2003. Notification of that came from the deputy governor of Coldingley Prison, a Mr Honey. He, I imagine, was the governor who was in charge of consideration of categorisation at that prison.

However, very shortly after that decision was made there was a change of mind. Once the decision was known, the claimant's solicitor had taken steps to endeavour to speed up the process whereby the claimant could be transferred to an open prison and had written, it seems, direct to Springhill Prison, in order to avoid any delays that the system might otherwise occasion.

The claimant was actually notified of the decision that the matter would be reconsidered and that it had been decided that he should not in the end go to Springhill but should be recategorised to C on 28th November 2003. When he was told this, he telephoned his solicitor in, understandably, a disturbed frame of mind. He was very upset that this decision had been made.

It is right to say that he had not been notified, either before the decision to recategorise to D to enable him to go to an open prison or before the decision to recategorise back to C so that he would not be able to go to an open prison. It is therefore necessary to see what reasons were given in the letter of 28th November. They were these:

The claimant's solicitors wrote to Mr Honey, who had been responsible for writing that letter, indicating that Mr Palmer was going to lodge the balance of the monies required to meet the compensation order with the court, and indeed on 22nd December that was done. Also, it had been pointed out in the earlier letter -- and indeed a copy of the Court of Appeal decision had been sent -- that there was no default sentence imposed in relation to possible non-payment of the compensation order. Accordingly, as the solicitors pointed out and as indeed the court order made clear, there was no question of any further default sentence.

Mr Honey replied to the solicitor's letter on 2nd December and this letter expands to some extent upon the reasons that had originally been given in the letter of 28th November. What Mr Honey said was this:

I will refer briefly to the Prison Service orders, which set out, among other things, the conditions which are appropriate for categorisation. There are four categories, running from A, which is the highest and most secure, to D, which is the lowest and under which a sentence can be served in an open prison.

The one thing that is clear is that categorisation is concerned with risk of escape and risk to the public if there is an escape, together with, in certain cases, whether the prisoner, albeit he may not be at risk of escape or may not be a danger to the public, is a person who raises problems of control; if, for example, he misbehaves in prison to such an extent that he requires a considerable extra degree of supervision. It is not for a moment suggested that Mr Palmer falls into that category. It has been said on his behalf that he has been a model prisoner and nothing has been put forward to contradict that statement.

Thus, the problems that were foreseen as a result of possible press publicity were not such as should have justified the decision which was made. Indeed, as far as I am aware, the civil claim has not produced the enormous press interest which Mr Honey feared would occur.

Furthermore, it seems that Mr Honey had been informed by the police that the amount of the civil claims could be up to £80 million. That was a gross exaggeration. The firm of solicitors, Irwin Mitchell, who were acting on behalf of potential claimants had set up a website in which they invited those who had suffered loss as a result of Mr Palmer's activities to come forward in order to join in a group action. In the end, the number of those who joined in produced a claim for about £4 million in total. Of those who came forward, some were beneficiaries of the compensation order and obviously the amount of the civil claim would be reduced, so far as they were concerned, by the amount that they had received under the compensation order.

It is not entirely clear, because judgment has been entered in the total sum of about £4 million, how much of the compensation order will be used to diminish that sum. It may be sensible to assume that up to £4 million is what the claimant will have to find. Having regard to the figure of £33 million, which was the subject of the confiscation order originally, it is not suggested that Mr Palmer would be unable to find that sort of sum of money and indeed the alacrity with which he was able to produce £960,000 in December of last year suggests that he does have access to substantial funds if he needs to use them. However, I am told that the situation is that the amount of the judgment has not yet been paid but that no steps have been or are to be taken to challenge the extent of that judgment. That, as I understand it -- and I hope I am right -- is the position as at today.

Following the decision to recategorise from D to C, which would have the result, and did have the result, of preventing the claimant going to an open prison, the claimant's solicitors wrote a letter before action and, receiving no satisfaction, on 8th January these proceedings were commenced.

However, on 28th January a fresh decision on recategorisation was made by Mr Honey to change Mr Palmer's categorisation from C to B. Mr Honey apparently informed the claimant and the claimant's solicitors orally as to why this had been decided. At tab 2, page 37, there is an attendance note from the solicitor, made immediately afterwards, in which he sets out his recollection of what he had been told by Mr Honey in the course of a meeting which had taken place on 30th January. Mr Martin, the solicitor, says that he pointed out to Mr Honey that the claim that the amount would be up to 80 million was, as he put it, "complete nonsense" and would be, on the basis of the statement served on 5th January, no more than 1.4 million plus interest. He also showed the governor the security documents; that is to say, the documents dealing with the security for the amounts. Furthermore, as Mr Newman has pointed out, there was a freezing order which froze Mr Palmer's assets to the extent of about £4 million. No doubt that freezing order was intended to and would ensure that at least that amount was available to meet any judgment which needed to be met.

In order to comply with the Prison Service Order requirements, a form, known as an RC1, is filled out in relation to recategorisation and that form contains a box which is headed "State how risk was increased" because, as I have said -- and again we will go to the relevant orders in a moment -- the question of risk is paramount in deciding on categorisation. This form, which has been filled out by Mr Honey, reads as follows:

Of course, that does not state the important point that the whole of that sum was covered by the amount that was already paid by way of security in relation to bail, which had not been returned to Mr Palmer, and the balance of £960,000-odd. So that sum was completely covered by what was already in court.

It goes on:

I will come back to those reasons shortly. Before doing so, it is worth noting what the Prison Service Order provides. The Prison Service Order does not have the force of law; it is the general guidance issued to the Prison Service as to how they should deal with a large number of different matters. The one with which we are concerned is, of course, categorisation. But it is a document, as I understand it, to which prisoners can have access, so that they will know too the basis upon which decisions which affect them are made.

So far as categorisation is concerned, it is required that the reasons for any recategorisation, certainly upwards, are provided to the prisoner. He may, of course, not necessarily know the precise source of the information which is relevant to risk because, as is obvious, such information may come from informants, it may come from confidential police sources, or otherwise it may be necessary, in order to protect third parties, that the prisoner does not know the details. But he should be given all such information as can be given. The reason for that is that there is the possibility of appeal against a recategorisation decision and obviously, if a prisoner wishes to appeal, he must know, so far as is possible, the reasons why the decision was made; he will not be able to make any sensible appeal if he cannot deal with allegations which he may say are inappropriate in his case.

Mr Newman has submitted as part of his claim that there is an obligation in the circumstances for there to be advance notice of and consideration of any representations before the recategorisation decision is made. Miss Richards has referred me to a decision of the Court of Appeal, R v Secretary of State for the Home Department ex parte Allen, a decision of 10th March 2000, which is unreported and has the marking QBCOF 1999/1267/C. Allen was a case where there was a claim for judicial review of a decision of the prison governor refusing to grant a home detention curfew to the respondent, who was then a serving prisoner. He was a short-term prisoner and obviously it was of considerable importance to him that he might be released. One of the submissions made was that he ought to have been able to make representations about it before the decision was taken. In paragraph 34 Laws LJ stated:

It seems to me that that is as applicable to recategorisation decisions generally as it is in the context of the decision which was in issue in that case. I say that subject only to this proviso: there is some authority that in relation to life prisoners it may be that there is a wider right to make representations before a final decision is reached. I say that because of the case of Hirst v Secretary of State for the Home Department [2001] EWCA Civ 378, decided on 8th March 2001 by the Court of Appeal. It is to be noted that May LJ, at paragraph 29, said this:

However, I am not concerned with those cases but only with the situation that exists in a case such as this and it seems to me it would be placing altogether too great a burden on the administration to require that representations are made or allowed to be made before a recategorisation decision is reached, particularly as it will often be the case that such decisions are made speedily, on receipt of information or as a result of change of circumstances of one sort or another.

In those circumstances, I am satisfied that all that fairness requires in the context of a situation such as exists in this case is that the claimant has the opportunity to appeal, as indeed he had.

While I am referring to that, it was asserted by the Secretary of State at an earlier stage in these proceedings that that was the route that he ought to have taken and that therefore judicial review was inappropriate. Whether or not that might have been persuasive if there had been no permission granted, I am not sure, but it might well have been because, as has so often been said, judicial review is a remedy of last resort, when all other possible remedies have been exhausted. But, Sir Richard Tucker having granted permission, on the basis, it is true, of a challenge to the original decision in relation to recategorisation from D to C, it would not in the circumstances, in my view, have been appropriate to forbid the claimant to continue the proceedings and to challenge the subsequent decision to recategorise from C to B because an appeal had not been pursued. That is because, as will become apparent, in my view the grounds relied upon were not capable of justifying the decisions that were in fact made.

That does not mean, I emphasise, that necessarily the decisions, when the full matter is considered on a proper basis, will be said to have been wrong. It is possible that one or other of them can be justified. But they certainly cannot, for reasons I am about to come to, be justified on the basis of the material which has been put forward to seek to justify them.

Before going further, I should refer to the material parts of the Prison Service Order, the PSO. It is the order reference number 0900 which is material and which deals with categorisation generally. At paragraph 3 it is noted that:

Then in 1.2.1, under the heading "Principles of Categorisation", this is said:

In the light of that, Ms Richards accepts that the sole issue here is whether the risk of escape or risk to the public if there was an escape justifies the decisions which were made. There is no question here of the behaviour of Mr Palmer giving rise to control problems. Nor indeed, as was clear from Mr Honey's letter of 2nd December, is there any question of a risk to the public if he were to escape. So the only live issue in determining categorisation is the risk that he would or might escape.

At 2.1.1 in chapter 2 of the document relating to recategorisation it is said that:

It is, as I have said, noted in 2.4 that the prisoner must be informed of the decision made and of the reasons for it and that if he wishes to appeal, he should do so, by using the request and complaints form, to the line manager of the assessor or the board chair. Effectively, what that means is that any appeal would go to a person superior to the person who made the decision which is the subject of any appeal.

Going back then to the reasons in form RC1, these have been expanded to a small extent by a witness statement which has been produced by Mr Honey. In relation to the original decision -- that is to say, that of November 2003 to stop the transfer to Springhill -- Mr Honey notes that:

It is a little difficult to follow why the claimant's solicitor's actions should have given rise to that concern. Mr Palmer is obviously a man of means and no doubt the solicitor was expecting to receive a reasonable reward for his services and it is not in the least surprising in those circumstances that he should feel that it was his obligation to do as much for his client as he could to achieve a speedy transfer. After all, any prisoner would want to get to an open prison earlier rather than later and it is well-known that sometimes bureaucratic delays can result in a decision to move prison being unnecessarily delayed. Accordingly, it seems to me that really was no sensible basis for a reconsideration of recategorisation. However, Mr Honey did reconsider it.

Then, coming on to the decision in January, having accepted that he did not take account of the appropriate criteria in the PSO in reaching his initial decision back in November, he then deals with the decision to recategorise to category B. He says this:

The problem with all that is, first of all, that taking account of the failure of an appeal against the compensation order of just over £2 million was not a material matter since Mr Honey was or should have been aware, and certainly was made aware on 30th January, that the compensation order was wholly covered by funds already made available and in court. Secondly, he had been told, if not then, then immediately afterwards, that the figure of 80 million was ridiculous. Indeed, as it has turned out, that is absolutely right because the total sum of the judgment is no more than £4 million.

It is difficult to follow quite why Mr Palmer, who had served by then some three years, or nearly three years, of his sentence and so would be eligible for consideration for parole after a further year or so should at that time suddenly decide to escape. He had shown no signs of doing so before and it is not easy to envisage why he should suddenly want to change his mind. Surely, the sensible thing for him to do was to serve his sentence quietly and then take advantage of the large sums of money he apparently has available to him when he concludes that sentence.

To say that there was uncertainty surrounding his financial dealings and legal position is to put the matter far too high. There was really no uncertainty at all. It is correct that he had access to unlimited, or very substantial, financial resources and so far as criminal associates are concerned, it may well be that he has had such associates. Certainly, no direct evidence has been produced to support that assertion but it may well be regarded as a reasonable assumption. But if it is suggested by that that he would have had associates who would be prepared to assist him escape, then surely money would have provided that in any case.

Finally, there is the reliance on the application for a position on the gardens party. It is a little difficult to follow the basis for regarding that as showing an increased risk of escape. The suggestion apparently is that, since the gardens are situated close to the perimeter of Coldingley Prison, being on the gardens party would mean that Mr Palmer was that much closer to the wire, and presumably thus it was thought he would be able somehow to achieve an escape. It is not for me to speculate as to how that might have occurred.

It is suggested that it was strange that he should ask to go to the garden from an apparently comfortable job in the workshop. Of course, there was nothing to have stopped anyone, Mr Honey included, from asking Mr Palmer why he wanted to go on to the gardens party and if the answer had not been satisfactory, it might have been better to have relied upon that. But in itself it seems to me to be as insubstantial as anything one can imagine.

In all the circumstances, but most particularly because of the failure to appreciate the reality in relation to the financial affairs and the compensation order, it seems to me that this decision was one which could not be justified by the reasons which were then given for it and indeed it is plain that the situation now is that the matter will have to be reconsidered.

To be fair, Miss Richards has accepted on behalf of the Home Office that there will have to be a reconsideration, particularly as there apparently has been a confirmation of the recategorisation into B which does not appear to have taken into account all the material factors which have been raised in these judicial review proceedings. So that in itself would mean that there must be a fresh consideration.

In the light of all that I have said and the history of this matter, it seems to me that there must be a fresh consideration, which must take into account all the material that Mr Palmer has raised in these proceedings. It may be sensible that, in the light of the history of this case and because the judicial review has produced exceptional circumstances, before any final decision is reached, Mr Palmer or those representing him can put in on his behalf all submissions that they would wish to put in to try to persuade the prison authorities that he should be downgraded again to D or at the very least to C. As I say, that is not because that is something which routinely need be done but because of the exceptional circumstances of this case, I think it would be, in the light of what has happened, sensible for that to be done in this case.

Accordingly and for those reasons, I am prepared to declare that the decisions made against Mr Palmer are flawed and should not stand and that the matter should be reconsidered in the light of what I have said and of course in the light of any submissions and fresh material that are put before the relevant decision-maker by or on behalf of Mr Palmer.

MR NEWMAN: My Lord, a number of matters. May I firstly make one minor correction to your Lordship's judgment?

MR JUSTICE COLLINS: Yes.

MR NEWMAN: It does not make the slightest difference, I do not think, to any of the consequences but, dealing with the order at page 42 in the civil proceedings, I think your Lordship referred to it as judgment in default of defence. It was not actually, technically --

MR JUSTICE COLLINS: I am sorry. I thought that is what --

MR NEWMAN: It was in default but it was not actually in default of defence.

MR JUSTICE COLLINS: I shall just say "judgment". I do not think it matters.

MR NEWMAN: My Lord, the next thing is may I, as a result of your Lordship's judgment, then seek a declaration in those terms, that the matter should be reconsidered?

MR JUSTICE COLLINS: I thought I had said at the end what I considered to be the appropriate form of declaration, namely that it should be reconsidered in the light of my judgment and with the benefit of any submissions that Mr Palmer, through his solicitors, in obviously a reasonable time, wishes to submit. I have added that in because it seemed to me, in the light of what happened in this case, sensible. As we have come to court, it would be foolish to insist upon what is usual.

MR RICHARDS: Yes. I am a little troubled by the making of exceptions for individual prisoners.

MR JUSTICE COLLINS: I follow that and that should not normally be done but I am only doing it because he has succeeded in the judicial review and it would be, I think, rather silly to insist that they do not have regard to any fresh submissions that may be made. I do not suppose there are any. I think they have all been fully covered.

MR RICHARDS: My learned friend and I did have a short exchange outside court. My Lord, Mr Palmer will not be invited to make representations --

MR JUSTICE COLLINS: Oh, no, no, no.

MR RICHARDS: -- because that is not the procedure. If his solicitors choose to make representations, they will be part of the material that can be considered in the normal way.

MR JUSTICE COLLINS: Yes, that is really what I was intending. Perhaps I did not put it as clearly as I should have done. All I was intending to say is that if they made any representations, they should be taken into account, and obviously they must make any representations, if they choose to do so, within a short timescale.

MR RICHARDS: Just in relation to the timescale, I wonder if your Lordship would be able to order an expedited transcript of the judgment because clearly the decision-maker will be assisted by seeing my Lord's judgment.

MR JUSTICE COLLINS: Yes, certainly. Have a word with the shorthand writer and you can make arrangements with her. As far as I am concerned, yes, but you have to butter her up.

MR NEWMAN: My Lord, the last thing is this: I ask for the applicant's costs to be subject to detailed assessment.

MR JUSTICE COLLINS: Yes, and that has already been conceded, I think, by Miss Richards.

THE CLERK OF THE COURT: There is no certificate.

MR JUSTICE COLLINS: The associate is querying legal aid. I rather assumed that Mr Palmer is not legally aided. I would be amazed if he was.

MR NEWMAN: Your Lordship is correct.

MR JUSTICE COLLINS: It is so usual in prisoner cases ...

All right. Thank you both.